04/03/2025 - 08:20 UTCThe US dollar fell against most major currencies on Monday, with the USDX down by 0.73%. The move came after U.S. President Donald Trump and Ukrainian President Volodymyr Zelenskiy clashed at the end of last week in an extraordinary meeting at the Oval Office raising concerns over global trade. Zelenskiy has since received a warm welcome in Britain, with U.K. Prime Minister Keir Starmer stating on Sunday that European leaders had agreed to draw up a peace plan to present to Washington.
Asian stocks experienced a sharp decline on Tuesday, mirroring a steep drop on Wall Street the day before. This came following a confirmation by the U.S. President that U.S. will impose 25% tariffs on imports from Mexico and Canada, coupled with a possible increase in tariffs on Chinese goods. This move is expected to disrupt supply chains, diminish export demand, and ultimately hinder economic growth.
Wall Street suffered sharp declines lately following the disappointing U.S. economic reports, coupled with escalating trade tensions, which pushed all three main stock indices lower in the past week. Investors are grappling with the potential impact of tariffs, which are widely expected to drive up inflation and erode corporate profits. The uncertainty surrounding the longevity of these tariffs, and whether they are primarily bargaining tools, is further unsettling markets. According to Morgan Stanley, the combined effect of tariffs on Mexico, Canada, and China could slash S&P 500 earnings by 5% to 7% by 2026.
For the week ahead, the focus turns to an interest rate announcement by the ECB, Non-Farm Employment Change and unemployment rate from the U.S., and speech by Fed Chairman Powell. Some price action could also be observed upon the of the release of quarterly earnings announcements from Broadcom, Costco, Merck ADR and Constellation Software later this week, ADP Non-Farm Employment data, U.S. ISM services PMIs and a speech by U.S. President Trump to a joint session of Congress at the Capitol Building.
The EUR/USD pair rallied on Monday, ending the session 0.70% higher, rebounding sharply from a two-week low of 1.0360 recorded on Friday. The Euro outperformed across the board following reports that European leaders, including Ukrainian President Volodymyr Zelenskyy and UK Prime Minister Keir Starmer, reached an agreement to draft a Ukraine peace plan at a high-stakes summit in London over the weekend.
Investors view the prospect of a negotiated truce between Russia and Ukraine as positive for the Euro, expecting that stability in the region would help restore the Eurozone’s supply chain dynamics.
Looking ahead, the key event for the Euro this week will be the European Central Bank (ECB) monetary policy meeting on Thursday. The ECB is widely expected to cut its Deposit Facility Rate by 25 basis points (bps) to 2.5%, marking its fifth consecutive rate reduction. Traders remain confident that the ECB will continue easing policy, particularly amid concerns that US President Donald Trump’s proposed tariffs could weigh on economic growth in the Eurozone.
Gold prices climbed on Monday, snapping a two-day losing streak as the US dollar weakened due to rising safe-haven demand and falling US Treasury yields. Heightened geopolitical tensions and fresh tariff threats from US President Donald Trump boosted the appeal of bullion.
Risk sentiment deteriorated following a clash between US President Donald Trump and Ukrainian President Volodymyr Zelenskyy last Friday. Additionally, new tariffs targeting Mexico, Canada, and China are set to take effect on Tuesday, further stoking economic uncertainty.
With ongoing geopolitical tensions, tariff uncertainty, and slowing economic momentum, gold remains a favored asset for investors seeking stability.
Oil prices fell more than 2% on Monday, hitting a 12-week low as reports confirmed that OPEC+ will move forward with its planned production increase in April. Concerns over the potential economic fallout from new U.S. tariffs further pressured crude demand.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia, collectively known as OPEC+, decided to proceed with an April output increase, according to sources familiar with the matter.
With geopolitical uncertainty, OPEC+ policy decisions, and trade tensions shaping the outlook, oil markets remain highly sensitive to upcoming economic and political developments.
U.S. stocks closed sharply lower on Monday, with the US 500 recording its steepest daily decline since December 18. Market sentiment soured after U.S. President Donald Trump confirmed that 25% tariffs on Canada and Mexico will take effect on Tuesday.
Major U.S. stock indexes hit session lows following Trump’s tariff announcement. Trump stated there is “no room left” for a deal that could prevent the tariffs, adding that reciprocal tariffs would also begin on April 2.
Adding to the pressure, U.S. economic data released on Monday showed that while manufacturing remained stable in February, factory-gate prices surged to their highest level in nearly three years. Delays in material deliveries also raised concerns that import tariffs could soon disrupt production.
The materials contained on this document should not in any way be construed, either explicitly or implicitly, directly or indirectly, as investment advice, recommendation or suggestion of an investment strategy with respect to a financial instrument, in any manner whatsoever. Any indication of past performance or simulated past performance included in this document is not a reliable indicator of future results. For the full disclaimer click here.
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